In this article, I will take a look at Artesian Resources Corporation's (NasdaqGS:ARTN.A) most recent earnings update (30 September 2019) and compare these latest figures against its performance over the past few years, along with how the rest of ARTN.A's industry performed. As a long-term investor, I find it useful to analyze the company's trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.
Have ARTN.A's earnings improved against past performances and the industry?
ARTN.A's trailing twelve-month earnings (from 30 September 2019) of US$15m has declined by -1.8% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 9.0%, indicating the rate at which ARTN.A is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s transpiring with margins and if the whole industry is facing the same headwind.
In terms of returns from investment, Artesian Resources has fallen short of achieving a 20% return on equity (ROE), recording 9.4% instead. However, its return on assets (ROA) of 4.0% exceeds the US Water Utilities industry of 3.8%, indicating Artesian Resources has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Artesian Resources’s debt level, has declined over the past 3 years from 6.1% to 4.8%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors affecting its business. I recommend you continue to research Artesian Resources to get a more holistic view of the stock by looking at:
- Financial Health: Are ARTN.A’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Valuation: What is ARTN.A worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether ARTN.A is currently mispriced by the market.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2019. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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